Often in the news of the cryptocurrency world there appear messages like: “The exchange will delist the token.” What does this mean? Why do platforms split coins? And what should investors who have this cryptocurrency in their wallet do?
What is cryptocurrency delisting
Delisting is the exclusion of a token or coin from the list of assets traded on an exchange. Once delisted, the delisted asset can no longer be sold or purchased. Each platform independently and independently makes a decision on delisting. Therefore, somewhere the token or coin will still be traded.
Why exchanges divide cryptocurrencies
Each exchange has a checklist with requirements, according to which assets are periodically analyzed.
It may include the following items:
• cryptocurrency stability;
• liquidity of the coin;
• trading volumes;
• blockchain security level;
• network stability;
• management policy, etc.
The most famous reasons for the delisting of cryptocurrencies:
1. Scandals related to the management and team of blockchain specialists.
2. Low liquidity of the coin (demand) and low trading volume.
3. Insufficient capitalization of cryptocurrency.
4. Frequent failures of the crypto project.
5. Regular hacker attacks.
6. Token anonymity.
These and many other factors may cause a cryptocurrency to be delisted. Moreover, centralized exchanges that have licenses are more sensitive to their own reputation and check assets more strictly.
How should an investor react to the desteeling of a token or coin?
Delisting should be taken as a wake-up call for investors. If at least one large exchange has delisted a cryptocurrency, this means that the asset has a bad reputation, the project turned out to be unreliable and may soon be discontinued. That is why the exchange decided to get rid of the dubious cryptocurrency and does not want to cooperate with this project.
Since each exchange has its own rules and policies, in most cases one person makes the decision to dеlete an asset (then others may follow). But almost always the investor has the time and opportunity to transfer the coin to another project and sell it or exchange it.
It is recommended to follow the news so as not to miss the notification of the upcoming delisting. And it is better not to invest in coins that are traded on only one exchange, so as not to lose your money when the cryptocurrency is removed from the listing.
What will happen to the coin after delisting? How will its price change?
Exchanges do not delist assets without reason. If someone made such a decision, it means that the cryptocurrency is inconvenient or unreliable, and its team has lost trust. All this does not add popularity to the coin, but reduces its liquidity and price. Therefore, cryptocurrency quotes are guaranteed to fall, the company’s rating will decrease, and investor loyalty will decrease. All this could be the last straw, after which the project will go to the bottom.
Drawing conclusions
Delisting in itself is not a collapse of the cryptocurrency, but an alarming signal for investors. In this case, it is better to reconsider your portfolio and switch to other crypto assets that have a good reputation and high liquidity.
